Friday, September 30, 2005

Beware of the Wal-Mart Booty Capitalists

We have already pointed out that Wal-Mart will undoubtedly be following its successful Chicago incursion as a model for breaking in to the New York City market. We have referred to the potential Wal-Mart partners in this effort as "booty capitalists" and although the term was coined by Karl Marx its modern application refers to some opportunists, especially in the African-American community, who, while having few economic resources of their own, will use their political positions and a company's vulnerabilities to their own personal advantage.

In the process the booty capitalists will undoubtedly evoke terms like economic empowerment to create an effective symbolic cover for their own aggrandizement. It will also not be surprising if we find out, after the fact, that the development effort cost a great deal more than it should have under normal market conditions.

This is exactly what happened in the original NYC case of booty capitalism: the building of a Pathmark Supercenter in East Harlem. And while Pathmark is certainly not in Wal-Mart's league when it comes to a whole host of labor and other issues the comparison is an apt one if we simple examine the development deal itself.

What happened in East Harlem was that Pathmark hooked up with Rev. Calvin Butts and the Abyssinian Development Corporation (ADC). The supermarket development was then transformed into a community empowerment project and the mostly Hispanic independent supermarket owners were effectively pitted against “The Community.” As a result, the development was also larded up with subsidies from the federal government, low interest loans from the city and a grant from the Local Initiatives Service Corporation (LISC), a spin-off of the Ford Foundation.

The money certainly flowed and as Tamar Jacobby and Fred Siegal pointed out later in the New Republic:

According to knowledgeable Harlem residents, this is exactly what happened with Pathmark...One person close to the deal claims that the supermarket could have been built at a fraction of its cost - but the developers - flush with low interest loans and government money chose to pay extra for the builder who got the contract...

Chose to pay extra? What an interesting circumlocution. This is precisely what the booty capitalist will always do. Where did the extra money go? Does anyone believe that the lucky builder was simply overpaid? And who was right in the middle of the transaction? The answer: none other than Charley Rangel, who was able to put aside his disdain for Cal Butts in the interest of commerce.

Now that we understand the methodology where will Wal-Mart strike? The logical assumption, one that we had made before, is Southeast Queens. This is where, in an interesting replication of the Harlem situation, a similar partnership is starting to form. We have the rapacious Reverend in the person of Floyd Flake and the opportunistic congressman in the person of Greg Meeks. The site has yet to be identified but trust our sources it is about to happen.

If it does, prepare for a monumental battle, one that will put the Chicago skirmishes to shame. Meeks, who voted against labor on CAFTA is the same guy who, along with Flake, got on the Port Authority boondoggle in support of the JFK Air Train to nowhere, a $3 billion waste of money. But it wasn’t a waste for Meeks, whose hand was out to every contractor involved in the project. Tellingly, in a meeting with the homeowners who opposed the train the congressman famously and shamelessly remarked to his constituents: "You know I can't get elected with money only from my district." Indeed!